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BACKGROUND Sunflower Hill project The City financially supported the construction of Sunflower Hill, a 31-unit affordable rental housing development for residents with special needs, which had an estimated construction budget of$19.2 million. The City provided a $2,250,000 loan from the City's Lower Income Housing Fund to Sunflower Hill Irby LLC, a limited partnership for which SAHA is a part of the partnership structure with Sunflower Hill. The City also collaborated with Alameda County Housing & Community Development Department (HCD) to allocate $7,195,844 of the City's Measure Al "Base City Allocation" to the Sunflower Hill project. Furthermore, the City executed a 75-year ground lease to allow the project to be constructed on the 1.64-acre dedicated to the City by the developer of Irby Ranch as an affordable housing site to meet its Inclusionary Zoning Ordinance (IZO) requirements, as outlined in the Development Agreement and Affordable Housing Agreement (AHA) for Irby Ranch / PUD-110. Construction of Sunflower Hill commenced in April 2019, and the project received its Certificates of Occupancy from the City in September 2020. The project lease up, which is being administered by SAHA, began in July 2020 and is nearing completion as all twenty-nine (29) affordable units have been leased up, and qualified households have begun moving into the development. DISCUSSION The Sunflower Hill project was approved as an affordable rental housing development for residents with special needs with 29 restricted units and 2 manager/staff units. However, Satellite Affordable Housing Associates (SAHA) is requesting the City's approval to have Sunflower Hill only have one manager's unit and instead voluntarily permanently restrict the studio unit at 60 percent AMI. Sunflower Hill originally intended to have a staff person living onsite. However, SAHA has since contracted with the Regional Center of the East Bay to provide Supportive Living and Independent Living Services to the Sunflower Hill residents. Consequently, at its July 15, 2020 Board Meeting, the Sunflower Hill Board of Directors unanimously agreed that the studio apartment, which had been reserved for use by Sunflower Hill staff, should be added to the pool of available units for rent to increase the number of available units for people with intellectual and developmental disabilities. Sunflower Hill, through its Residential Programs Manager and in coordination with the on-site Services Coordinator, will continue to provide on and off-site life-long learning, vocational and life -skills training including opportunities for connection with the greater community to the Sunflower Hill residents. Additionally, releasing the studio staff unit and designating it as a rent restricted unit would make the project more financially supportable in the long term as the project would generate additional rent revenue from this studio unit. The table below illustrates the additional annual rental revenue of about $15,785 that would result from a studio unit restricted at the 60 percent AMI rent level. Page 2 of 3